Bill Text: TX HB3134 | 2011-2012 | 82nd Legislature | Comm Sub

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Bill Title: Relating to the plugging of inactive oil and gas wells.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Passed) 2011-06-17 - Effective immediately [HB3134 Detail]

Download: Texas-2011-HB3134-Comm_Sub.html

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By: Crownover (Senate Sponsor - Duncan) H.B. No. 3134
(In the Senate - Received from the House May 6, 2011;
May 9, 2011, read first time and referred to Committee on Natural
Resources; May 17, 2011, reported adversely, with favorable
Committee Substitute by the following vote: Yeas 9, Nays 0;
May 17, 2011, sent to printer.)
COMMITTEE SUBSTITUTE FOR H.B. No. 3134 By: Nichols

A BILL TO BE ENTITLED
AN ACT
relating to the plugging of inactive oil and gas wells.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 89.022, Natural Resources Code, is
amended by amending Subsection (b) and adding Subsections (d), (e),
and (f) to read as follows:
(b) Notwithstanding Subsection (a), a person who assumes
responsibility for the physical operation and control of an
existing inactive well must satisfy the requirements of Sections
89.023(a)(1) and (3) [(4)] not later than six months after the date
the commission approves the initial form described by Section
89.002(a)(2) and filed with the commission under which the person
assumes responsibility for the well.
(d) Before the commission issues an order refusing to renew
an operator's organization report under Subsection (c), an
authorized commission employee or a person designated by the
commission for that purpose must determine whether the operator has
failed to comply with the requirements of this subchapter. If the
authorized commission employee or designated person determines
that the organization report does not qualify for renewal on that
ground, the authorized commission employee or designated person
must:
(1) notify the operator of the determination;
(2) provide the operator with a written statement of
the reasons the organization report does not qualify for renewal;
and
(3) notify the operator that the operator has 90 days
to comply with the requirements of this subchapter.
(e) After the expiration of the period specified by
Subsection (d)(3), the authorized commission employee or
designated person shall determine whether the organization report
qualifies for renewal and notify the operator of the determination.
If the authorized commission employee or designated person
determines that the organization report does not qualify for
renewal because the operator has continued to fail to comply with
the requirements of this subchapter, the operator, not later than
the 30th day after the date of the determination, may request a
hearing regarding the determination. The operator shall pay the
costs associated with a hearing requested under this subsection.
(f) If the commission determines following the hearing that
the operator has failed to comply with the requirements of this
subchapter or the operator fails to file a timely request for a
hearing, the commission by order shall refuse to renew the
organization report. The organization report remains in effect
until the commission's order becomes final.
SECTION 2. Section 89.023(a), Natural Resources Code, is
amended to read as follows:
(a) The commission may grant an extension of the deadline
for plugging an inactive well if the operator maintains a current
organization report with the commission as required by Section
91.142 and if, on or before the date of renewal of the operator's
organization report as required by that section, the operator files
with the commission an application for an extension that includes:
(1) an affirmation that complies with Section 89.029;
(2) [a statement that the well and associated
facilities are in compliance with all commission rules and orders;
[(3)] a statement that the operator has, and on
request will provide, evidence of a good faith claim to a continuing
right to operate the well; and
(3) [(4)] at least one of the following:
(A) documentation that since the preceding date
that the operator's organization report was required to be renewed
the operator has plugged, or restored to active operation as
defined by commission rule, a number of inactive wells equal to or
greater than 10 percent of the number of inactive wells operated by
the operator on that date;
(B) an abeyance of plugging report on a form
approved by the commission that:
(i) is in the form of a certification signed
by a person licensed by the Texas Board of Professional Engineers or
the Texas Board of Professional Geoscientists;
(ii) includes:
(a) an affirmation by the licensed
person that the well has:
(1) a reasonable expectation of
economic value in excess of the cost of plugging the well for the
duration of the period covered by the report, based on the cost
calculation for plugging an inactive well; and
(2) a reasonable expectation of
being restored to a beneficial use that will prevent waste of oil or
gas resources that otherwise would not be produced if the well were
plugged; and
(b) appropriate documentation
demonstrating the basis for the affirmation of the well's future
utility; and
(iii) specifies the field and the covered
wells within that field in a format prescribed by the commission;
(C) a statement that the well is part of an
enhanced oil recovery project;
(D) if the operator of the well is not currently
otherwise required by commission rule or order to conduct a fluid
level or hydraulic pressure test of the well, documentation of the
results of a successful fluid level or hydraulic pressure test of
the well conducted in accordance with the commission's rules in
effect at the time the test is conducted;
(E) a supplemental bond, letter of credit, or
cash deposit sufficient for each well specified in the application
that:
(i) complies with the requirements of
Chapter 91; and
(ii) is of an amount at least equal to the
cost calculation for plugging an inactive well for each well
specified in the application;
(F) documentation of the deposit with the
commission each time the operator files an application of an amount
of escrow funds as prescribed by commission rule that equal at least
10 percent of the total cost calculation for plugging an inactive
well for each well specified in the application; or
(G) if the operator is a publicly traded entity:
(i) the following documents:
(a) a copy of the operator's federal
documents filed to comply with Financial Accounting Standards Board
Statement No. 143, Accounting for Asset Retirement Obligations; and
(b) an original, executed Uniform
Commercial Code Form 1 Financing Statement, filed with the
secretary of state, that:
(1) names the operator as the
"debtor" and the Railroad Commission of Texas as the "secured
creditor"; and
(2) specifies the funds covered
by the documents described by Sub-subparagraph (a) in the amount of
the cost calculation for plugging an inactive well for each well
specified in the application; or
(ii) a blanket bond in the amount of the
lesser of:
(a) the cost calculation for plugging
any inactive wells; or
(b) $2 million.
SECTION 3. Section 89.024(a), Natural Resources Code, is
amended to read as follows:
(a) An abeyance of plugging report filed under Section
89.023(a)(3)(B) [89.023(a)(4)(B)] is valid for a period of not more
than five years.
SECTION 4. Section 89.025(a), Natural Resources Code, is
amended to read as follows:
(a) For purposes of Section 89.023(a)(3)(C)
[89.023(a)(4)(C)], an inactive well is considered to be part of an
enhanced oil recovery project if the well is located on a unit or
lease or in a field associated with such a project.
SECTION 5. Section 89.026(a), Natural Resources Code, is
amended to read as follows:
(a) Documentation filed under Section 89.023(a)(3)(D)
[89.023(a)(4)(D)] of the results of a successful fluid level test
is valid for a period of one year from the date of the
test. Documentation filed under that section of the results of a
successful hydraulic pressure test is valid for a period of not more
than five years from the date of the test.
SECTION 6. Section 89.027(a), Natural Resources Code, is
amended to read as follows:
(a) A supplemental bond, letter of credit, or cash deposit
filed under Section 89.023(a)(3)(E) [89.023(a)(4)(E)] is in
addition to any other financial assurance otherwise required of the
operator or for the well.
SECTION 7. Section 89.028(a), Natural Resources Code, is
amended to read as follows:
(a) Escrow funds described by Section 89.023(a)(3)(F)
[89.023(a)(4)(F)] must be deposited with the commission each time
an operator files an application for an extension of the deadline
for plugging an inactive well.
SECTION 8. The changes in law made by this Act apply only to
an organization report the renewal of which is pending as of the
effective date of this Act or that is filed on or after the
effective date of this Act.
SECTION 9. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2011.
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